EU guarantees €21 billion for banks to lend SMEs

A new initiative by the European Commission will see €21 billion of funding guarantees offered to banks in order to stimulate lending to SMEs, it has been announced.

Since the financial crisis, many small businesses have struggled to secure loans, lacking sufficient capital to do so. The EU is anxious to facilitate the lending needed for these businesses to grow, in order to drive economic recovery and create jobs.

Through an agreement signed with the European Investment Fund (EIF), an organization which provides risk finance to SMEs across the continent, the Commission will open up a total of €25 billion of potential finance for SMEs over the next seven years. Of this, €1.3 billion will set aside to finance SMEs the the Competitiveness of Enterprises and Small and Medium-Sized Enterprises programme (COSME)

Ferdinando Nelli Feroci, Commissioner for Industry and Entrepreneurship, said: “Thanks to COSME, European SMEs will soon have access to up to €25 billion in additional finance in the form of both loan guarantees and equity. This is an important part of the EU’s response to overcome the well-known difficulties SMEs face in obtaining access to credit.”

Pier Luigi Gilibert, Chief Executive of the EIF added: “Building on the successes of the Competitiveness and Innovation Programme, COSME’s predecessor, which has enabled SME financing of approximately €20 billion and helped to support more than one million jobs, we aim to further improve the access of finance for SMEs and to contribute to growth and employment in Europe.”